Israel's Prime Minister Benjamin Netanyahu and U.S. President Barack Obama Have again squared off, this time over Israeli construction in the eastern Jerusalem neighborhood of Sheik Jarah. The two leaders had already crossed after Obama declared that all building in existing Israeli settlements on the West Bank must stop, something Netanyahu rejects. Although Special Middle East Envoy George Mitchell and Defense Minister Ehud Barak have met twice trying to break the impasse over the settlement issue, the Israeli leader has dug in his heels over what he views as Israel's sovereign right to build in east Jerusalem. IsraCast says the latest clash is actually over Obama's insistence that Jerusalem will be up for negotiation in future Israeli-Palestinian talks while Netanyahu contends that Jerusalem is non- negotiatble as far as he is concerned.

If U.S. President Barack Obama and Israel's Prime Minister Benjamin Netanyahu had been shadow-boxing over Israel's ' natural growth ' building in the West Bank settlements, they are now trading diplomatic blows over Jerusalem. In Washington, the State department summoned Israeli Ambassador Daniel Oren to receive an official protest over plans to build 20 housing units in the Sheik Jarah neighborhood of east Jerusalem. Obama sent a clear message that he views east Jerusalem as no different from Israeli settlements on the West Bank. As such, all building should also be prohibited there as well. The land, including the old, abandoned Shepherd's Hotel, was purchased by Jews from its Arab owners in 1983 and the building plan was approved by the Jerusalem Municipality some five years ago.

Apparently getting wind that construction was about to start the State Department swiftly intervened; Netanyahu's riposte was not long in coming. At the beginning of the weekly cabinet session in Jerusalem, he made use of the TV cameras to issue a strong statement on the affair. 'United Jerusalem is the capital of the Jewish people and the State of Israel. Our sovereignty over Jerusalem is unassailable and as such Jewish residents can but apartments in all parts of the city. We cannot accept the very idea that Jews will be denied the right to live and buy anywhere in Jerusalem. I can just imagine the outcry if anyone would propose that Jews be forbidden to live in certain neighborhoods or buy flats in New York, London, Paris or Rome. All the more so, where Jerusalem is involved'.

The land in question is adjacent to the Hebrew University Campus on Mount Scopus, the Mount Scopus-Hadassah Hospital and the National Headquarters of the Israel Police. With such key institutions, most Israelis could never imagine it ever being given up. ( In fact, the Mount Scopus complex was an Israeli enclave cut off by Jordanian forces during Israel's War of Independence in 1948).

In the eyes of Netanyahu supporters, the Obama Administration has adopted a 'get tough' approach to the Netanyahu government that does not bode well for future relations. Upon taking office, the new President spoke of the need to speak 'honestly' to Israel , something his predecessors in the White House had not done. This was followed up by his demand for a total freeze on building inside the existing settlements and this he has now applied to Jerusalem. In between, Obama pandered to the Arab world with his Cairo speech in which he referred to the modern day Israel rising from the Holocaust while ignoring its more than three-thousand year history in its biblical homeland. Moreover, he compared the struggle of Afro-Americans to that of the Palestinians while again ignoring that it was the Arab side which has always rejected the 'two state for two people' solution until this very day and bears responsibility for nine bloody wars.

What is also worrisome is even Secretary of State Hillary Clinton, somewhat disingenuously, claimed there were no official records of any previous understandings between the U.S. and Israel on building inside existing settlements - the natural growth dispute. However, Elliot Abrams , the former American official involved has contradicted Clinton. And now former Prime Minister Ehud Olmert has set the record straight.by his article in the Washington Post. Olmert, by no stretch of the imagination a Netanyahu fan, has clarified: 'Understandings with the Bush administration provided a working platform and, in my opinion a proper balance to allow essential elements of stability and normality for Israelis living in settlements until their future would be determined in a permanent-status agreement. I adopted these understandings and followed them in close coordination with the Bush administration'. Moreover, the former Israeli leader added: 'Without those understandings the Annapolis process would not have taken on any form'. Olmert turned over backwards before leaving office trying to achieve a peace accord with Palestinian President Mahmoud Abbas has reached the conclusion that the focus on settlement construction is not useful.

After failing to break the impasse, Olmert concluded: 'Only a political process that demands courageous decisions from leaders on both sides will bring a solution to the issue of settlements'. However, the growing impression is that the Obama administration is distancing itself from Israel in order to draw closer to the Arab side. At the President's recent meeting with Ameriocan Jewish leaders in the White House, Obama was asked if he were not pressuring Israel more than the Arabs. He reportedly denied it saying he was not pressing Israel more than he was the Arabs.

What doesn't sound right about that? It's a kind of symetry between Israel and the Palestinians after Israeli prime ministers leaders repeatedly offered the two- state solution starting with Yitzak Rabin at Oslo but the terror continued under Yasir Arafat. Then super-dove Shimon Peres took over only to be welcomed with a wave of Palestinian suicide bombers, condoned by Arafat, that cost Peres the election to be succeeded by Netanyahu. After defeating Netanyahu, Ehud Barak went to Camp David 2000 and with a go-for- broke package for a Palestinian state on 96% of the West Bank and Gaza with a land exchange on the remaining four per cent and the partition of Jerusalem.

There was also a proposed deal to allow some of the Palestinian refugees to return to Israel. But when Barak insisted that the Palestinians must agree that the conflict was over and a clause on the ' finality of claims', Arafat did not even reply, he just walked away. He went home to unleash the Second Intifada of violence and bloodshed. Then former President George Bush came up with the Roadmap peace plan for Palestine, along with a nine-billion dollar foreign aid package to get the ball rolling. To sweeten the pot, hard-liner Ariel Sharon had totally evacuated all of Gaza and four West Bank settlements. All the Palestinians had to do was stop the terror against Israel and go to the table.

Some of the 'moderates' lead by Mahmoud Abbas said good idea the time is ripe to go for an agreement. However, a majority of the Palestinians, after the U.S. insisted that radical Hamas be allowed to run in the Palestinian election, voted for terrorist Hamas in what was described as the first democratic Palestinian ballot. Then of course at least half of the Palestinian camp cheered on Hamas as it drove Abbas and his Fatah supporters out of Gaza while chanting for the destruction of Israel. Then the Palestinians with their elected Hamas government exploited the territory evacuated by Sharon to escalate the terrorism by launching thousands of rockets at Israeli civilians just over the border. ( A UN enquiry is now investigating whether Israel is guilty of war crimes during the Cast Lead operation to supress the attacks after eight years of rocketing from Gaza!.)

Now it's reasonable to assume that Obama's Middle East have all the inside details of this past history, at their finger tips. But even most recently, former Prime Minister Olmert has indicated that he even went farther than Ehud Barak's proposal at Camp David. Remember that Olmert was a driving force behind Sharon's avacuation from Gaza and after becoming prime minister Olmert also talked of a similar 'disengagement' on the West Bank. After his intensive talks with Abbas, an exasperated Olmert wrote: 'To this day, I cannot understand why the Palestinian leadership did not accept the far-reaching and unprecedented proposal I offered them. My proposal included a solution to all the outstanding issues: territorial compromise, security arrangements, Jerusalem and refugees.

It would be worth exploring the reasons the Palestinians rejected my offer and preferred instead, to drag their feet, avoiding real decisions'. Again, Olmert's proposal also included the 'finality of claims' clause that would obligate the fractured Palestinian leadership to tell their people the conflict is over, they must be ready to live in peaceful coexistence with the Jewish state of Israel. They would have to get used to the idea that Palestine would be established in the West Bank and Gaza and to forget about ever returning to Israel. How can President Mahmoud Abbas possibly do that when he governs only the West Bank while his arch-rivals Hamas rule the roost in Gaza. Moreover, even the 'moderate' Abbas has vowed never to recognize Israel as the Jewish homeland while one of his top aides, Saeb Erekat declared: ' Netanyahu will wait a thousand years before the Palestinians will recognize Israel as a Jewish state!' So, if Palestine is to be the Palestinian state what is Israel supposed to be? To many Israeli ears this sounds more than fishy: is it a cover for pocketing Israeli concessions and continuing the struggle against Israel by other means?

In any case, the Palestinians have missed the train when it comes to getting a similar offer from Netanyahu and it appears that Israeli public opinion stands behind the Likud Prime Minister. A recent poll indicated that the right wing - religious bloc would go up by six seats in the Knesset. Pundits are speculating about the role played by two of Obama's top advisers- Ram Emmanuel and David Axelrod both who happen to be Jewish while Emmanuel's family was Israeli. The grapevine has it that they are both less than enamored with Netanyahu and have been urging the get tough approach. What does all this boil down to? The Palestinians have struck out six times. Be that as it may, this cuts no ice with the new American administration. It is the wont of U.S. presidents to present their own Middle East peace plans and Obama is apparently revving up his blueprint. And with the Iranian nuclear clock ticking down, the stakes for Israel and others are very high.

Netanyahu's challenge is to keep relations with Washington on an even keel without yielding on Israel's vital interests and while also preserving his coalition government. It is a slippery tightrope to tread with his right- wing partners scrutinizing his every move. Netanyahu, in tandem with Defense Minister Ehud Barak, is apparently about to try and square the circle if the Haaretz report about future move to dismantle 23 unauthorized outposts on the West Bank. Sharon gave a written commitment to Bush to tear down the outposts as part of the understandings on the settlements. This step is guaranteed to be violently opposed by many right-wingers would boost Netanyahu's credentials with the Obama administration not to speak of reasserting the rule of law in Israel.